Public Bill Committee

[Mr. Mike Weirin the Chair]

Schedule 6

Estate agents’ redress schemes

Amendment proposed [this day]: No. 23, inschedule 6, page 62, line 29, leave out ‘may’ and insert ‘shall’.—[Lorely Burt.]

Ian McCartney: I welcome you to the Chair again this afternoon, Mr. Weir. I hope that we enjoy the sitting as much as we enjoyed the first sitting today. Before dealing with amendment No. 28, I should like to report back to the Committee following the discussion of clause 13 in last Tuesday’s sitting. I told hon. Members that I would raise the issue of the recalibration of token payment metres with Ofgem. I have today received a written response from Ofgem, which has also written to the Clerk of the Committee in that regard. I was not sure this morning whether the Clerk had received that response, so I apologise for that. In case hon. Members have not received the response, I have brought copies of both the letter and the memorandum that Ofgem prepared for the Committee. I hope that they will bring hon. Members up to date on Ofgem’s position and help them to consider whether they might want to raise other issues on Report stage. Copies are on the Table.
On amendment No. 23, I shall first respond to the hon. Member for Solihull and then deal with the issues raised by my hon. Friend the Member for Ealing, North and suggest a way forward, which I have not yet discussed with my officials. The Government’s aim in introducing the estate agents’ redress provisions is to require all estate agents to join a high-quality redress scheme. I am happy to make it absolutely clear to the House, as I did in numerous debates this morning, that we intend to ensure that they are high-quality, not Mickey Mouse, schemes. [Interruption.] I will say Donald Duck schemes then.
A high-quality scheme is one that uses generally accepted criteria for best practice, which include accessibility to all consumers, including vulnerable consumers; ease of use; clarity of operation; timeliness of complaints resolution; and responsiveness and transparency of decision making. We want to ensure that all home buyers and sellers have access to redress for legitimate complaints against estate agents. The amendment would make it compulsory for the Secretary of State to lay an order requiring estate agents to belong to a redress scheme. We cannot accept the amendment, as it is possible to envisage scenarios in which, for short periods, there is no approved scheme for agents to join.
The Office of Fair Trading can withdraw its approval from a scheme if it no longer meets the approval criteria. We discussed the circumstances in which that could happen during our consideration of an earlier amendment. For example, approval could be withdrawn amid serious concerns that scheme was not providing to the OFT information that it had about agents not complying with legislation. Approval might also be withdrawn after a change in the governance structure that, in the OFT’s opinion, compromised the ombudsman’s independence. The OFT must be notified of any change to the running of the scheme within14 days of the change taking place. The OFT will quickly be aware of changes to the scheme and will be able to assess whether they affect its approval.
Approval would also be withdrawn if there were concerns about the effectiveness of the complaints handling system, where an unacceptable backlog of unassessed cases had built up. If a scheme was unable to handle the number of complaints, because it was not adequately resourced, for example, the OFT could withdraw its approval. The amendment would make no difference to what would happen in practice; all estate agents would be required to join a redress scheme. I hope that the hon. Member for Solihull is reassured about the drafting of the clause.
My hon. Friend the Member for Ealing, North raised the issue of fly-boarding, which is the practice of putting up false “for sale” or “sold” boards, to represent to consumers that an estate agent has more properties on the books than is actually the case. “For sale” boards must comply with the Town and Country Planning (Control of Advertisements) Regulations 1992. Fly-boarding can be addressed under the Trade Description Act 1968 and the Control of Misleading Advertisements Regulations 1988. Abuse of that type appears to have fallen considerably. I shall come back to that in a moment.
As a consequence of enforcement interventions by the OFT and local authority trading standards services, many more estate agents are signing up the relevant parts of the ombudsman’s code of practice for estate agents, which forbids fly-boarding. The OFT took action against fly-boarding in 2004 against a company called Mankind Property Services, trading as Bairstow Eves Countrywide. Its new office in New Cross, London, had to give written undertakings not to erect false “for sale” boards in contravention of the Control of Misleading Advertisements Regulations 1988. Fly-boarding is to some extent self-policing, as complaints are usually made by rival estate agents who have a knowledge of the local market and spot false sale boards. That is the background to the issue, but it does not help my hon. Friend with his complaint.
The Office of Fair Trading recommended that agents should be required to identify the specific property in question on their sale boards. That was not proposed in the Bill, because we needed to consider compatibility with the unfair commercial practices directive, which was not completed at that point. Although abuses of that sort are half folly, I take this recommendation seriously, and I assure my hon. Friend that the OFT, my team that will be established to implement the legislation and the team that is currently in place to implement the unfair commercial practices directive will be brought together to have a meeting to consider what more can be done to resolve the issue. Without prejudice, I hope to try to have that discussion before we next meet on the Floor of the House when the Bill is considered on Report. I cannot guarantee that, but I will try to do so and report back to the Committee on the discussions held.

Mark Prisk: I am sure that the Committee welcomes the Minister’s comments. Does he intend to ensure that the principal trade bodies or professional organisations involved in the industry are at least consulted before that meeting so that it might be informed by the views of the principal representative practitioners, or will he do that after the meeting?

Ian McCartney: First, the OFT has already consulted on the issue, which is why it has made its recommendations. I am simply saying that I take the issue seriously, and I take it even more seriously when the OFT has already considered the matter. We could not deal with the issue when drafting the Bill, because of the formulation of the unfair commercial practice directive. I am simply suggesting that I bring the parties together and then come back to the Committee and inform it about what was said. I hope to do so before the Bill is considered on Report, but if that is not feasible, I will have to say that I was unable resolve the issue at that stage. If I can do something, I would rather get it right than just try to curry favour with people. I reassure my hon. Friend the Member for Ealing, North that, having taken his point seriously, I will try to do something about it.

Stephen Pound: My right hon. Friend has an enviable reputation for rapid action, but he has surpassed even his own high standards today. I thank him most sincerely for that—on behalf of not myself, but my constituents and other hon. Members who have raised that concern. We will look with great interest to the statement that will be made on the Floor of the House; but in the meantime, I thank my right hon. Friend for his prompt and positive action.

Ian McCartney: I thank my hon. Friend for his kind remarks. I cannot definitely commit myself to dealing with the issue on Report, but I will try my best to do so. However, hon. Members should rest assured that, whether it is done on Report or at another time, I will come back with a substantive reply to the Committee, and if that has to be in writing, so be it. Given that the OFT has already done the work on the issue, I hope that we can consider it and find a way forward. I hope that the hon. Member for Solihull can accept my explanations and will withdraw her amendment, but I will wait to find out whether she is happy with what I have said.

Lorely Burt: I am very interested and somewhat reassured by what the Minister has said. He talks about exceptions that would justify the retention of the word “may”. I am sufficiently reassured by him saying that the intention is that the word “shall” will be used. I am extremely pleased that the debate has given an opportunity for the hon. Member for Ealing, North to air a concern that I am sure is common to all hon. Members. I, too, look forward to hearing the results of taking the issue forward. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Susan Kramer: I beg to move amendment No. 24 , in schedule 6, page 62, line 29, at end insert ‘(a)’.

Michael Weir: With this it will be convenient to take amendment No. 25, in schedule 6, page 62, line 31, after ‘work”)’, insert—
‘(b) developing and directly selling residential property to members of the public; or
(c) facilitating temporary periods of residence to members of the public at residential property not owned by those members of the public;’.

Susan Kramer: Thank you, Mr. Weir. My apologies to you and the other members of the Committee for not being present during this morning’s sitting.

Ian McCartney: The hon. Lady was sorely missed.

Susan Kramer: I gather that I may have been sorely missed, because my hon. Friend the Member for Solihull was so effective. I am providing a little relief for her by moving the amendment. AmendmentsNos. 24 and 25 must be read together, otherwise neither makes any sense. They raise, once again, two issues that were touched upon under clause 2, and which willbe raised in relation to other amendments that will be proposed later in the discussion. They are crucial to the Bill’s character, to provide proper protection for consumers, and they address schedule 6.
Proposed new section 23A in schedule 6(2) currently reads:
“The Secretary of State may by order require persons who engage in estate agency work in relation to residential property (“relevant estate agency work”) to be members of an approved redress scheme for dealing with complaints.”
We would change that with these two amendments, so that it would read:
“The Secretary of State may by order require persons
 (a) who engage in estate agency work in relation to residential property ;
 (b) developing and directly selling residential property to members of the public.”
There would also be a paragraph (c), which I will go into in just a second.
Paragraph (b) clearly deals with developers who are selling either directly, off-plan, or whatever else, who are not covered under the existing language. We feel that that is a huge loophole and that developers are not held accountable under the same kind of redress requirements that apply to an independent estate agent. Indeed, there is nothing to say, because there are so many forms by which people can set themselves up to sell residential property, that a developer could not use individuals, such as those who could form, for example, a casual estate agency, to sell that property off-plan.
We think that there is a huge loophole and that this is a great opportunity to tackle it. More and more people are buying from developers, particularly as we rely more on new builds for opportunities to move.One has only to look out of the window in Londonto be aware of how widespread is the engagement of developers in producing new homes for the market. Not to have that covered by the Bill strikes me as an incredible failure.
Paragraph (c) is probably even more important. It would draw into the redress scheme those
“facilitating temporary periods of residence to members of the public at residential property not owned by those members of the public.”
Those are cumbersome words, but we all know that that is the language of letting. Again, that is an attempt to bring letting into the scheme. The Minister willbe aware that the letting industry is huge; it is worth £12 billion a year. I believe that the Minister accepted on Second Reading that those who rent are often among the most vulnerable in our communities. Under the Bill, they are offered the least protection. Again, I will not reiterate what we have discussed, but Shelter has examples of case studies of individuals being charged £300 just to get information on a potential let, when the only work put in by the agency was a phone call to either side. People are trapped and suffer real abuse. Many estate agents handle both sales and lettings, so, again, it is relevant for the Bill to cover both sides of what they do.
We are conscious that the Government are putting in place a temporary deposit protection scheme, but that does not cover many of the disputes that surround lettings in the broader sense. We also understand that, on Second Reading, the Minister said that a review was in hand. This is something that the Office of Fair Trading did not consider when it looked at the world of estate agents and it is something that was under review. It was said that, in a couple of years, something might come forward. It seems to me that this is obvious and straightforward. We know that there are sometimes20 years between Bills that address real estate issues, so why not use this opportunity to put in place language to protect the most vulnerable? These two amendments provide an opportunity to do that.

Mark Prisk: These two amendments appear to address concerns which a number of members of the Committee share about the scope of what is estate agency work and what is not. Mr. Weir will be aware that we, on these Benches, have tabled two substantive new clauses that address these issues, and which I trust we will have the opportunity to debate later. Therefore, I will not paddle through the arguments in their entirety now.
I endorse entirely the aspirations of the hon. Member for Richmond Park (Susan Kramer) in seeking to put forward these concerns. My worry is that the wording is somewhat unclear. Amendment No. 25, for example, refers to
“facilitating temporary periods of residence to members of the public at residential property not owned by those members of the public”.
I would not necessarily call that the language of residential lettings, although I think that I know where the hon. Lady is heading with it. The reference to “periods” in that context seems peculiar, and I think that it is the idea of leasehold interests that is intended. Therefore, my problem with the wording as it stands is that I am not clear whether it makes any sense, either in or out of context.
The proposal seeks to amend this Bill rather than address the source of the definition of estate agency work, which lies in section 1 of the original Estate Agents Act 1979. An estate agent is defined as being a person who stands between the house purchaser and the vendor, and so the question is how the legislative definition can amend or complement that concept of estate agent as intermediary. I am not clear as to whether these amendments achieve that, which is why I have serious reservations about them. The aim is right, and I strongly support it. We have a 28-year-old definition that clearly needs to be modernised, but, sadly, the drafting falls short of the mark.

Ian McCartney: Before I deal with the amendments and my reasons for, unsurprisingly, rejecting them, I will deal with the two general points made as part of the overall case put by the hon. Member for Richmond Park.
The first general point was on letting agents, who are subject to different regulations from estate agents. They are governed by the Accommodation Agencies Act 1953, which makes it illegal for agents to charge prospective tenants for lists, addresses or details of properties that they have in their possession. I think that that was the point the hon. Lady was making. European legislation on unfair consumer contracts and unfair commercial practices also applies to this area. I will write to the hon. Lady and to hon. Members on how that will happen in practice.
On property developers who act as independent estate agents, any person doing estate agency work, as defined by section 1 of the 1979 Act, will be caught by the redress provisions. They do not have to call themselves estate agents; it is what they do that matters. That is an important point of clarification for thehon. Lady.
Amendments Nos. 24 and 25 seek to extend the redress provisions beyond estate agency work to include lettings work and the sale of new-build properties. To be fair, the hon. Lady is being consistent. Identical amendments were tabled by the Liberal Democrats in another place, and they received no support there—probably not just because of the Government’s position, which I will come to in a moment, but because, as the hon. Member for Hertford and Stortford (Mr. Prisk) said, even if one agrees with their principle, they are seriously flawed in structure.
As I said, letting agents are subject to different regulations from estate agents, namely the Accommodation Agencies Act 1953. The Government have already taken action to improve the rights of tenants. The tenancy deposit scheme that came into force at the beginning of April deals with one of the main causes of concern for tenants: their deposits being withheld unfairly by landlords or their agents. Landlords have the choice of three schemes, but they must join one. For the first time, all tenants who keep their property in good condition will have the reassurance of knowing that they can get their deposit back. Tenants who have problems securing repayment will have access to a free dispute-resolution service under the deposit scheme.
In addition, the Government are acting to protect the most vulnerable members of society from exploitation. The Housing Act 2004 requires the mandatory licensing of high-risk houses in multiple occupation. Therefore, private landlords who manage homes in multiple occupation of three storeys or more, or occupied by five people or more who form more than one household, will require a licence from the local authority. Furthermore, the local authority will have the discretion to extend licensing to other categories of multiple occupation homes to address particular management problems that may exist in such properties. The Government are aware of the concerns of the quality standards of newly-built homes. That was one of the issues that was addressed by Kate Barker in a review of the issues underlying the supply of housing in the United Kingdom. Her report, published in 2004, recommended that the house building industry did not demonstrate increased levels of customer satisfaction. By 2007, the OFT should conduct a wide-ranging review of whether the market for new housing was working well for consumers.
It is extremely disappointing that the House Builders Federation has not responded to Kate Barker’s call to put in place a code of practice governing new house sales. I asked the OFT to look into the market. I have been reassured that it is aware of Parliament’s concerns, and of the debates that we had on Second Reading and since, and that it is keeping open the option of a market study, and currently assessing the industry’s response. If the OFT does not look at that, I give the Committee the assurance that we will.
I say to the hon. Members have spoken today that they need to look carefully at the issues on this matter, and assess whether further action is needed. I want those issues to be resolved, which is why I have prompted a Government review of the wide property market, after consulting the Minister for Housing and Planning, my hon. Friend the Member for Pontefract and Castleford. The review will look at regulation and redress across the whole property sector, including lettings. It does not make sense to look at one area in isolation. We need to look at the whole story to ensure that if we take measures in one place, that does not disadvantage the market in the long term for consumers. Simply extending the regulation in stages to agents and property developers without further thought is just plain sloppy. We should apply some intelligent thought to what is appropriate to each area, and co-ordinate it. On the plan to start the work in the summer, officials are in the process of drawing up terms of reference for the work, and are looking at the timescales. We need to target the review into areas where gaps remain in the redress provisions for consumers, although there are sure to be significant areas of consumer detriment. Debates in the House and in another place have already identified issues of particular concern, which will be addressed by the review, including all comments made about the Bill in another place and on the Floor of the House. I have accepted that there is evidence of concern and have sought to meet that with the officials dealing with the review.
The Bill is not the place to make changes. Part 3 of the Bill amends the Estate Agents Act 1979, which does not cover lettings. Detailed work will need to be done to ensure that all the sections of the Estate Agents Act and secondary legislation made under the Act work better for letting agents and property developers. The Act’s scope is limited specifically to the buying and selling of land, which is clear from the fundamental definition contained within the Act, such as “interest in land” and the duties owed by estate agents, such as information to be given to clients.
Moreover, the Bill implements the recommendations made by the OFT in its report on the estate agency market in England and Wales. That report did not look at the lettings market, or at the market for new-build properties. We have no clear evidence base on which to take action at this stage. Although those markets are closely related, there are significant differences between them, and we need to take that into account in terms of any proposals that we bring forward to the House at a later date. It is also important that we consult properly with industry and stakeholders. I am sure that we agree that if the Government are to take action, it should be based on evidence and, hopefully, a common approach to dealing with the issues that the hon. Member for Richmond Park raised and with which I have total empathy and understanding. I am not trying to put off the date, or avoid the need to do something; I think that we should do it in a more effective and comprehensive way, and the Bill is not the place to do that. I hope, with those assurances, that the hon. Lady will withdraw her amendments. If she presses them to a vote, I will ask my colleagues to reject them.

Susan Kramer: First, I thank the Minister for the assurances that he has just given us, because he has very much strengthened the comments that he made on Second Reading, which is greatly appreciated. What we want to see is a solution to problems, rather than to engage into any kind of grandstanding on the issues. Although I concede that the words that are used in the amendment are rather inelegant, the solution is actually quite elegant. It would have brought those bodies into the redress scheme with relatively minimal effort. There is no use crying over spilt milk by saying that lettings and direct sales were not brought into the concept of the Act from the beginning, which would obviously have been the easiest course of action for everybody and brought about a remedy sooner.
Based on the Minister’s assurances, we shall not press the amendment to a Division. We look forward to the work that I understand will be started in the summer either under the auspices of the OFT or directly by the Government. I look forward even more eagerly to the action that will flow from it—not just a review but actual action to deal with potential abuses. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mark Prisk: I beg to move amendment No. 41, in schedule 6, page 65, line 7, leave out ‘may’ and insert ‘must’.

Michael Weir: With this it will be convenient to discuss amendment No. 42, in schedule 6, page 65,line 19, leave out ‘a’ and insert ‘the’.

Mark Prisk: Amendment No. 41 is a fairly simple probing amendment that is intended to ensure that a code of practice has been approved by the OFT in accordance with the criteria set out. Will the Minister clarify the circumstances in which the OFT might wish not to approve a scheme?
Amendment No. 42 is a different matter altogether. The purpose behind it is to establish the case for a single code of practice. Consumers need clarity and simplicity whenever possible, particularly when they are seeking redress. We discussed that earlier in our deliberations. The more uncertainty or complexity, the fewer people will seek, let alone secure, reasonable redress for their grievances.
In discussing redress schemes and ombudsman schemes we have had a lot of discussion about whether there should be one scheme or more. The problem is that if there were one, it would mean scrapping several established schemes. There is already more than one ombudsman in the market, with one in England, one in Scotland and so on. However, what really matters to home buyers is that the principles upon which those schemes are based remain either very similar or preferably the same. That is the principle behind the amendment—to have one code of practice. There might be several ombudsman schemes, as there are now, but they would be based on one clear code. In those circumstances, consumers would be much better placed to understand what would happen and they would therefore have much greater confidence in the system.
The Government argued in another place that best practice could be achieved if several codes existed, but there is no reason why the best codes that are out in the public domain could not be drawn together in a single code. After all, the perspective to consider is not that of the agent, the legislator or the ombudsman. It should be that of the home buyer or home seller. Having several different codes of practice, and several different schemes drawing from them, could lead to considerable confusion and might lower, or at least not help, consumer confidence about how the redress schemes will work. Because we support the redress schemes, we want to ensure that the public have the maximum confidence and understanding of the basis upon which they operate and therefore exactly what they are entitled to expect.
To put my question to the Minister simply, how will consumers benefit from there being more than one code of practice?

Ian McCartney: First, I accept that the amendments are probing; indeed, they were tabled in Grand Committee in another place by Baroness Wilcox and Lord De Mauley. My noble Friend the Parliamentary Under-Secretary explained the effect of the amendments, and I shall do so again to set out the arguments for resisting them.
The OFT will not approve a scheme that does not meet the criteria set out in the Bill. It will also be able to publish guidance about how it will interpret those criteria, so whether or not there is more than one scheme or code of practice, it is certain that schemes will be able to operate effectively only if they reach the standards required by the regulator.
I wish to explain why I do not support the intention behind the amendments—to require the Government to design a single code of practice that all redress schemes would use to judge the conduct of estate agents. I accept that the intended effect of such a code is to introduce compulsory minimum standards. We have already extensively debated more explicit attempts to introduce positive licensing, so I shall not coverthat ground again. Indeed, we covered a lot of it this morning, when we spoke a lot about what the standards would look like if a scheme was approved and about what they should cover.
I know that this is not the intention, but the amendments could weaken the Bill by creating uncertainty about which code was being referred to. The hon. Member for Hertford and Stortford might come back and say, “We want a single code so that there isn’t any uncertainty,” and he might think that the words in the amendments are plain, but I shall explain what I mean in a moment.
As drafted, the Bill allows an ombudsman to refer to a range of industry guidance documents in coming to a view about the grounds on which a complaint can be made and what standards of behaviour can reasonably be expected in the industry. In previous discussions, we said that the redress scheme covered not only serious complaints—even up to those that could require criminal prosecutions—but complaints about general issues, which might look small on the face of it, but which might involve issues that were very disruptive to the individual’s attempts to buy and sell property. Schemes have therefore been designed to take into account not only breaches of the law per se, but poor practice that arises when services are provided to the consumer. We are trying to maximise the opportunities for the ombudsman to look at the grounds for a complaint to see whether the consumer’s expectations of the estate agent they are complaining about are reasonable.
A number of industry bodies have their own codesof practice or similar documents. The ombudsmanfor estate agents, the National Association of Estate Agents and the Royal Institution of Chartered Surveyors, of which the hon. Member for Hertford and Stortford is, I think, a member, all have codes of practice or rules of conduct, which they expect their members to follow. We see no reason for an ombudsman to look only at one code or for the Government to tell industry which code estate agents should follow and which should fall by the wayside. It is for the regulator to determine such matters.
At the same time, estate agents know that they will risk claims being made against them if they fail to comply with good practice in a general sense and not just as prescribed in one document. That goes back to the point that I made in one of our debates about dealing not only with serious complaints, but with the estate agent’s general conduct towards the client. It is important to bear in mind that a general sense of good practice cannot be laid down in a single document, because it goes across a whole array of activities carried out by estate agents and their staff.
It is also important to note that the present drafting future-proofs the Bill against future developments. We have had quite a lot of good debates, including this morning, about ensuring that legislation can cope in a fast-changing market place and that changes can be made to secure and maintain consumers’ rights. We are attempting to ensure that potential changes do not make the legislation redundant or out of date or prevent it from quickly transmitting changes in the marketplace to protect the consumer’s interests. Best practice will develop, and new guidance and codes will emerge over future years. It is therefore important not to tie the ombudsman’s hands to a document that will inevitably become out of date.
The Bill’s drafting contains some sophistication to deal with a varied approach to assessing complaints, but the amendments would remove that sophistication. Our approach builds on current practice in the industry, and will ensure, with the approval of high-quality schemes, that consumers have redress for complaints against estate agents who fail to comply with good practice in a general and a specific sense.
With that explanation, I hope that the hon. Member for Hertford and Stortford can accept that we are trying genuinely to meet his objective of ensuring that we have certainty about the high standards in the codes of practice.

Mark Prisk: The Minister has put forward two central arguments. One is that it is better to have a general code or a range of different documentation against which business may or may not be held to account and that knowledge of such expectations about general conduct is more likely to raise standards. That may be the natural perspective from the Government’s point of view, and I understand the belief behind it—it may be proved to be true—but there is a difficulty. A lot of smaller businesses—most agencies, particularly the law-abiding ones that are trying to do the right thing, are smaller businesses—will be anxious to ensure that they are crystal clear about their obligations. If they cannot identify the things that they are required to achieve by consulting a single source, there is a weakness in the suggestion that they will know what their obligations are.
The difficulty is that there are two different perspectives. The one of Whitehall is understandable; it looks down at the market and says, “We want to encourage this general conduct and it is advantageous to have available to us the option of a range of different documents and rules.” However, I am keen to ensure that the majority of businesses in the market understand what is required of them. Preferably, they should be able to find that out from a single source—its information might come from a range of contributors—so that they know where they stand and what is expected of them. Then they will also know that if they are held to account they will be able to demonstrate what they have done correctly. The lack of clarity worries me.
The future-proofing element has some merit, given the way in which the Bill is drafted. I would have preferred to see in the first instance a set of schemes that are based on the fact that there is currently a range of redress schemes, but which have the potential to be based on one. The legislation could make it possible to base the process on a common set of standards so that the industry knows where it stands and so does the house buyer or seller.
The Minister has done his best to put the Government’s view. I think that he and I have the same end aim, but I am not convinced that he has addressed my concerns, so I wish to press amendment No. 42 toa vote.
I beg to ask leave to withdraw amendment No. 41.

Amendment, by leave, withdrawn.

Amendment proposed: No. 42, in schedule 6, page 65, line 19, leave out ‘a’ and insert ‘the’.—[Mr. Prisk.]

Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 9.

Question accordingly negatived.

Lorely Burt: I beg to move amendment No. 26, in schedule 6, page 68, line 25, leave out ‘£1,000’ and insert ‘£10,000’.

Michael Weir: With this we may discuss the following: Amendment No. 27, in schedule 6, page 68, line 25, leave out ‘£1,000’ and insert ‘£3,000’.
Amendment No. 28, in schedule 6, page 70, line 31, at end add—
‘5 In section 3(8) (orders by Director General of Fair Trading) for “the statutory maximum” substitute “£10,000”.’.

Lorely Burt: The amendment stands in my name and that of my hon. Friend the Member for Richmond Park. All the amendments here—certainly amendments Nos. 26 and 27—relate to the penalty for not being a member of a redress scheme.

Mark Prisk: May I just correct the hon. Lady? In fact, amendment No. 28 does not relate to redress schemes; it relates to something else.

Lorely Burt: It does indeed. I am grateful to the hon. Gentleman for pointing that out.

Stephen Pound: He has led you astray.

Lorely Burt: The fault was entirely mine.
 Amendment No. 26 seeks to increase the maximum fine from the Government’s suggested amount of £1,000 to £10,000. It is noteworthy and commendable that the Government have already moved from a £500 amount, which was originally suggested in another place. However, we are discussing the maximum fine that can be imposed; it is not the usual fine. We are seeking to put a benchmark so that, where there are companies serially infringing, occasion after occasion, the amount of the fine can escalate to ensure that it is effective in its intention, which is to guarantee that an organisation is part of a redress scheme.
We would like to ensure that, although the usual fine will not necessarily be £10,000, there will at least be the ability to raise the fine against vexatious organisations, to make sure that the fine really bites on those organisations.
Amendment No. 27, which was tabled by the Conservatives, seeks to raise the amount from £1,000 to £3,000. I must confess that I am slightly confused, because, as I understand it, the amount released to the press was £10,000. I am intrigued to know quite what has happened.

Mark Prisk: The sum of £10,000 relates to amendment No. 28.

Lorely Burt: Thank you.
 Susan Kramer rose—

Lorely Burt: My hon. Friend wishes to intervene? [Laughter.]

Michael Weir: Order.

Susan Kramer: Perhaps my hon. Friend might like some clarification. I think that the press release from the Conservatives was about on-the-spot fines of £10,000 for non-membership of a redress scheme.

Tobias Ellwood: On a point of order, Mr. Weir. We are here to discuss amendment No. 26, not to discuss a press release that the Conservatives may or may not have sent out.

Michael Weir: I think that it was a reasonable point to make in the course of a debate, as long as we do not dwell on it too long.

Lorely Burt: I certainly would not dwell on such an issue. Suffice it to say that the Conservatives and the Liberal Democrats feel that the maximum fine is not sufficient and £1,000 will not do the job as a maximum fine when there is a serial offender.
I would like to speak briefly about amendmentNo. 28, which was also tabled by the Tories. It relates to the powers of the director general of the Office of Fair Trading to fine rogue estate agents. As I understand it, the statutory maximum fine at the moment is £5,000 and the amendment would raise it to £10,000. However, as I understand it, by putting a figure on the amount primary legislation would be needed to ensure that it keeps up with inflation.

Stephen Pound: I am grateful, as ever, to the hon. Lady. Could she just clarify a point for me quickly? I am tempted to support amendment No. 26. The wording in the Bill says “not exceeding £1,000”. She is proposing to delete “£1,000” and insert “£10,000”. Thus, is she proposing that it should say “not exceeding £10,000”, on the basis that the fine could be six pence halfpenny, or £100, or any sum? Is she proposing the same wording, “not exceeding”?

Lorely Burt: I am grateful to the hon. Gentleman. I am pleased to clarify that, in amendment No. 26, that is the wording that we are seeking to include—“not exceeding £10,000”. That would give sufficient leeway for on-the-spot fines to relate to the seriousness of the offence, unlike amendment No. 28, which was tabled by the Conservatives. While we believe that it is important to have large possible fines for rogue estate agents, there may come a point when flexibility is required. As circumstances change and as inflation may or not increase, depending on which Government we end up with after the next general election, primary legislation may be needed to keep up with this. We are not minded to support amendment No. 28. We feel that £10,000 is the appropriate maximum amount which will give plenty of leeway to make an appropriate fine to levy on individual companies who are not members of the redress scheme.

Mark Prisk: The three amendments relate to fines, but in different circumstances. That is the point to bear in mind. One set of fines relates to breaches of the rules of the redress schemes, which come under this part of the Bill, and one fine—the £10,000 in amendmentNo. 28—relates to breaches under the OFT’s powers, which is a separate point. I hope that that clarifies the matter because it can be confusing.
Amendment No. 27 would increase the limit for the fine for not being part of the redress scheme to £3,000. The Government propose that every estate agent, or everyone training an estate agent, must be part of such a scheme. The Government’s desire to require agents to belong to the scheme is very welcome. We strongly support it. However, the fine that was originally proposed was just £500. That is inadequate. In the other place it was increased to £1,000 following an amendment by Lord Dubs, a Labour peer. The Government accepted that after some debate.
Given that the average estate agent’s fee is now £3,000—obviously in London and the south-east it will be higher than that—we feel that the fine of £1,000 is still inadequate. It needs to be higher. If the Bill is to send the right signal to that minority who give estate agency a bad name and who flout the rules, it needs to focus their minds on the fact that if they breach the redress proposals they will be fined an amount that they will notice. That is why we propose a fine of £3,000.
What is the £10,000 about? Amendment No. 28 would impose a large, maximum fine for those people who have been found to have flouted the laws under section 3 of the Estates Agents Act 1979, which the Bill seeks to amend. As the hon. Member for Solihull pointed out, the fine is currently £5,000. Section 3 of the Act provides the OFT with the ability to prohibit someone from trading as an estate agent. The procedure that the director-general of the OFT follows is quite clear and includes a number of investigation and warning points. It is therefore separate from the issue of redress schemes.
All hon. Members will be aware of some of the appalling cases of rogue estate agents who have cheated the public in a number of different ways over the years. They are, of course, a minority, but their activities have resulted in people being robbed of savings, being caused considerable heartache and, in many cases, being subject to serious financial loss. Recently the media have highlighted a number of different cases, and we saw them on “Panorama”. The Evening Standard has also been vigilant in highlighting a series of cases where people have been cheated and where practices have been completely unacceptable.
It is clear that the OFT’s powers need strengthening and that a clear signal must be sent that rogue agents will be barred and face financial penalties. As we know, the Government are proposing limited increases in the OFT’s and trading standards officers’ powers. That is fine, but it will not necessarily be noticed by the real rogues, given that, as I said, the average estate agent’s fee is £3,000.

Stephen Pound: I am rendered almost speechless by the distance that the Conservative party has moved from the laissez-faire days of yore. Does the hon. Gentleman anticipate tariff bands for varying offences, and if so, will he indicate where he feels that the tariff bands should be set?

Mark Prisk: I suspect that the hon. Gentleman knows that there are a range of fines. The maximum for a summary conviction stands at £5,000—I think that that is level 5 or 4. I would guess that the Minister has that emblazoned on his memory.

Stephen Pound: He will have in a minute.

Mark Prisk: Yes, he will have it emblazoned in his hand in a minute.
The fines rise through a series of tiers. A £10,000 maximum fine would send a simple but clear message to the rogues. Decent agents have nothing to fear from this because—remember—the fine would come only when someone found to have broken the rules has been investigated by the OFT and barred from trading as an estate agent. We argue that point because the kind of person who becomes a rogue estate agent is, frankly, also the kind of person who, having been barred by the director-general of the OFT, will go on to be a rogue car dealer, plumber or whatever it may be.

Tobias Ellwood: A politician?

Mark Prisk: I would not wish to stretch the number of rogue vocations any further.
Although it is important that such an individual can be barred from estate agency, we must send them a clearer signal that deters them from coming into the business in the first place. Otherwise, they will come into it, nail or scam somebody, and then move on to something else. We need to send them a clear financial signal.

Lorely Burt: The hon. Gentleman is talking about an individual who comes into estate agency and then enters a number of other industries. However, I remind him of the discussion that we had this morning: requiring people to be qualified and have the appropriate amount of insurance surely would act as a barrier to entry for someone purported to be a rogue estate agent. The scenario that he is talking about, therefore, would not occur so easily.

Mark Prisk: I admire the hon. Lady’s optimism about the kind of people with whom we are dealing. They will happily get around the qualification procedures that we discussed. It is not an issue of confidence, but of ethics, as I said. I think, therefore, that we need to send them the clearest financial signal that if they are found guilty by the director-general, in the way that I have described, not only will they be barred from estate agency, but they will pay a fine that they will note. I hope that that would then prove to be a deterrent and encourage many of them not to trade in the industry. As I said, it is important that they be barred, which is the case under rules that the Government have in law. However, it is just as important that we hit them where it really hurts—the wallet.

Ben Wallace: I want clarification on the penalty notices. Will they have the same effect as we have seen elsewhere? One of the problems is often the record-keeping of the officers or those who give them out. Certainly, we have seen that in the police environment: people have been given them for shoplifting, but that has not always been recorded, so the details on some serial offenders have not been stored or logged and they have not been traced. Perhaps I missed it—I am sure that I have—but will schedule 6 provide that persons in receipt of a notice are logged with an authority or passed on to the OFT, so that they can be traced if, for example, they move from an area covered by a trading standard office in London and set up shop in Lancashire? That is important if people are to have faith in the penalty notice system.

Ian McCartney: This has been an interesting little debate. Mirror, mirror on the wall, who’s the toughest of them all? The Liberal Democrats and the Conservatives are vying over who really is the friend of the consumer and, as a consequence, saying that the Government are soft. Let us remind people that this is the first Government ever to take action in this sector. We have introduced redress, which, as it currently stands, is established for the scheme at up to £25,000; access and new powers for the OFT and for trading standards officers, including the ability to prevent companies and their employees from working in the sector; and the ability and capacity of the OFT working on the ground with trading standards officers to take immediate action when they receive a complaint. We are discussing a not inconsiderable resource for the consumer.
As the hon. Member for Hertford and Stortford said, one amendment deals with the failure to join a redress scheme, and another deals with banning orders and failure to comply with a banning order. Let us remember that a banning order is issued when someone has committed a serious offence, perhaps even a criminal offence, and at that point action has already been taken. I shall return to why that is important.
Amendments Nos. 26 and 27 focus on the level of the penalty charge, but the charge is not the full enforcement story. We must not get penalty charges out of proportion. They are a trigger point for far tougher potential sanctions. Ultimately, estate agents face the prospect of being banned by the OFT, following an investigation, as a result of not belonging to a redress scheme. That is a very serious sanction, and, to most estate agents, that deterrent will be worth far more than £3,000 or £10,000. It will mean the total loss of their business, revenue and livelihood.
A penalty charge is a quick and simple deterrent that gives local authority trading standards officers a quick and simple sanction against estate agents who arenot members of a redress scheme. It is important to remember that the £1,000 charge can be repeated again and again—it is not a one-off charge. It is an incentive, is it not? If someone wants to snub their nose at the consumer or at a law designed to clean up the activities of people in this sector, it will be a very expensive operation indeed. Not only will they have a financial loss again and again, but they could lose their capacity to operate as a business.
The penalty charge can be repeated every day, if necessary. Let me give an example. If someone makesa complaint to a trading standards officer, it is immediately logged. If it is found that the estate agent is not a member of a redress scheme, they will face a potential fine of £1,000. No doubt they will be informed that they are in breach of the law and that they should get themselves registered. If the trading standards officer checks the following day—they will be able to identify when the agent has registered—and the agent still has not registered, another £1,000 can be charged. The trading standards officer cannot vary the amount. They cannot say, “I will give you a second chance this time and fine you only £500.” That will not happen. The fine will be £1,000, £1,000, £1,000. It will be repeated and repeated, if necessary.
Hon. Members have not realised the potential ofthe fine. If a trading standards officer is faced with a blatant and continuing breach, he can inflict a considerable financial penalty, but, crucially, it is left to trading standards officers to use their judgment and discretion in the light of the circumstances.
It is expected that the penalty will be higher than the cost of membership of an approved scheme. Let me explain the process in a bit more detail. When an estate agent is found to be in breach of their duty to belong to an approved redress scheme, the trading standards officer may issue them with a penalty charge, currently laid out in the regulations at £1,000. Should the agent fail to join an approved scheme quickly, the trading standards officer can continue to issue penalty charges. At the same time, the trading standards officer will be under a duty—this goes back to the point that the hon. Member for Lancaster and Wyre rightly made about whether there is an audit trail; this is just as important—to inform the OFT about any estate agent who is not a member of a redress scheme. If an estate agent continues not to belong to a scheme, the OFT will be able to consider the fitness of the estate agent to practise and will be able to issue a warning order, which could ultimately be followed by banning the agent from practising. In sufficiently serious cases, the OFT could bypass the warning order process and decide to go straight to banning the agent.
The Committee can begin to see the story; it is more than just a matter of £1,000. Any estate agent, individually or collectively, who decides not to comply is a loser from the moment it takes that decision, anda complete loser if it continues not to comply. In addition, under the Enterprise Act enforcers can take action such as seeking injunctions from the High Court against estate agents prohibiting infringements under the Estate Agents Act. Therefore, the penalty charge itself is only part of the process, which is why we should not over-exaggerate the importance of the figure, despite what I said about it being charged time and again, if necessary.
There are many advantages to having a quick and simple sanction, issued with minimum bureaucracy, but it also has limitations. The benefits offered by having a simple civil penalty process are greater than those offered by a penalty charge regime that has a range of fines with a higher maximum. Case law shows that where high fines can be levied individual circumstances should be taken into account to ensure that the fine imposed in a particular case is not excessive—a necessarily more bureaucratic and time-consuming process. It gives the opportunity for the rogue elements to string things out and continue in business until they come before a court. With a £1,000 fine they pay up—end of story. If they do not pay up, there is another £1,000 fine. Each time it happens the OFT is notified and it can order an immediate ban.

Ben Wallace: I am grateful for the Minister’s clarification of the proposal. I am confident that we are on the road to solving the problem that I raised.
How broad can the OFT be in naming individuals? We are only too aware, often through watchdog programmes, that although the salesman may be caught out the directors of companies stay at arm’s length and may reappear in a new company. How far can the OFT go in banning individuals or issuing a penalty charge notice to ensure that those people who take advantage of new, young salesmen are caught and held to account?

Ian McCartney: When you are banned, you are banned. If someone works for estate agent A, they cannot just pop next door and work for estate B. They are banned for a specific purpose, because they are not fit. If the company is closed, it is because it is not fit. It is important to make that clear and that is why it is such a total loss if people decide to defy the law and refuse to put into place what is required by the enforcement officers—the OFT or the trading standards officer.

Ben Wallace: I understand what the Minister is saying with respect to individuals, but directors of companies is a broader matter. If we are to close down  on an industry abuse, directors, no matter how far removed, must have some corporate responsibility. If a company is closed down, do all the directors have a tag against their names? How far can that go?

Ian McCartney: As the Bill shows, if individuals are culpable they will have the full letter of the law against them, as will the organisation concerned. I return to a point that the hon. Gentleman made at a previous sitting, that other legislation comes into play if directors are operating a business in an unfit way. The hon. Gentleman does not want a junior member of staff to carry the can and I agree with him. There was a television programme a few months ago in which an estate agent—I will not mention any names, but I think we all know who it is—was exposed for very dodgy practices, which they will get done for under this Bill. The excuse was that one rogue employee was to blame, and he was sacked. In those circumstances the employee and the employer would have been liable for those breaches under this Bill and that is critical. We cannot have people using their power as an employer to make an employee carry out dodgy activities on their behalf and walk away from it.
To be fair, there will be occasions on which someone is operating in a way that is unacceptable and there is a breach, and the employer may not know about that. That is why both situations are covered. Action has to be evidence based. I hope that that explanation helps the hon. Member for Hertford and Stortford.
£3,000 is not a suitable amount for a trading standards officer to walk in off the street and levy against an estate agent, and £10,000 even less so. That sort of levy would appropriately by imposed only by a court or tribunal where the penalty charge could be varied. This penalty charge will be the same amount every time—£1,000. That is already at the high endof the civil penalties scale. No environmental civil penalties exceed £500, and £1,000 is considerably higher than the £500 referred to in the Housing Act 2004. The hon. Member for Hertford and Stortford is right. £5,000 is level 5 under the Magistrates’ Courts Act 1980, I have been reliably informed—not that I have had to face that myself, by the way.
Following careful consideration of the arguments, we have already accepted an amendment to the Bill to increase the maximum level to £1,000, as the hon. Member for Solihull said, but going any further would be unfair. Let us remember that the real sanction, after a proper and fair process has been conducted, is that an estate agent can be banned if found unfit following non-membership of a redress scheme.
Amendment No. 28 is intended to increase to £10,000 the maximum fine that can be imposed by a magistrate on an estate agent who has breached a banning order. In my view, if the case is serious enough to warrant a £10,000 fine, it should be dealt with by the Crown court, where there is no limit on the fine that can be imposed. If we are talking about deterrence, that is where deterrence should lie. If the case is serious enough for a £10,000 fine to be imposed, it should go to the Crown court, because we are talking about a very serious breach with that level of fine.
The amendment is technically in the wrong place. I do not say that for clever dick purposes. It would fit better in clause 55, which relates to prohibition orders. However, the amendment enables me to explain what we need to do. At the moment, if a person is considered unfit to act as an estate agent and is banned by the Office of Fair Trading from doing so but continues to practise, one of two things can happen. They can be convicted in a magistrates court and required to pay a fine not exceeding the statutory maximum, which is currently £5,000, so a £10,000 fine could not be imposed in those circumstances, because the law sets out that the maximum that can be levied is £5,000. In more serious cases, defendants are tried in the Crown court, where they are liable to pay an unlimited fine, so if we are really looking for a return in these cases, that is where they should go—the fine is unlimited.
Magistrates have the power to send a case to the Crown court for sentencing if, after hearing the evidence, they decide that the offence was so serious that a higher fine should be imposed than they have the power to inflict. We are covered in two ways. If a case goes to the magistrates court and the evidence is such that the magistrates decide that the level of fine that they have powers to levy is insufficient, they can send it to the Crown court for sentencing. In my view, the types of case that the hon. Member for Hertford and Stortford rightly highlighted should in any event go to the Crown court, where there is not a £10,000 fine, but an unlimited fine. The Government are not being soft on the issue—far from it.

Mark Prisk: But in the nature of the legislation at the moment, that is not necessarily an option that is available.

Ian McCartney: It is. In all circumstances, it is. Let me explain what is changing. This takes us back to the debate that we had earlier about the new powers of access to records and the maintenance of records. Why is that so important? It provides an audit trail—an evidence trail—where it is difficult at the moment for that to happen. If people do not maintain the evidence and audit trail, that is a breach in itself. So I say to anyone who thinks that they will be clever enough not to keep the records so that they do not face a £5,000, £10,000 or unlimited fine, “Forget it, pal”, as they say where I come from. That is an offence in itself, which could lead to a banning order for them and their company. Any attempt to undermine the capacity to represent fairly both the consumer and the good businesses in this marketplace is doomed to failure, in my view.
I am glad that the amendments were tabled, in that, although I said at the beginning that there was a competition to see who was the toughest, in reality, if there is a toughness in this, I hope that I have explained that it comes from the Government in how we have set this out.
I thank hon. Members for their amendments, and, given the opportunity, I hope to explain that we are not operating a minimalist approach. The proposal is to put in context the overall strategy, structure and process to be used by the Office of Fair Trading on the one hand and trading standards officers on the other, and their interrelationship as regards issuing on-the-spot fines, as well as in their dealings with the magistrates court and higher courts, if required. If we put all those building blocks together, we will see that our position is significantly strengthened as regards dealing with rogue estate agents.
 Moving on, section 53(8) of the Estate Agents Act—[Interruption.] I cannot read my notes. [Interruption.] I am sorry, it is section 3(8) of the Act. I heard a voice from God, and God is a female. [Laughter.] That will confuse the Liberal Democrats. I will be in trouble with the Church of England, the Catholic Church and everyone else.
Section 3(8) provides that an estate agent whofails to comply with a banning order can be convicted in the Crown court or the magistrates court, whichjust confirms what I have been saying for the past10 minutes. [Interruption.] It is good to have God on your side. I hope that my explanation helps to convince hon. Members for the Conservatives and Liberal Democrats that we are not going soft—far from it. The sanctions here are significant.

Lorely Burt: This has been an extremely useful and wide-ranging debate and, before I go on to speak to our amendment, I wish to comment on the remarksof the hon. Member for Lancaster and Wyre. The Minister says that, eventually, a rogue estate agent can be banned, and that point is accepted. However, the hon. Gentleman raises a good question about who is covered by that ban. It is important that we have good, strong legislation in place to deal with directors who are serial offenders. That reminds me of work that we are considering at the moment to do with the serial liquidators of small businesses. Not only are they a pest to the industry, but they have caused the downfall of many of the small businesses that supply them and of their customers, who deserve protection. I hope that this will introduce a debate that we can take forwards.
The hon. Member for Hertford and Stortford has proposed his amendment for a £3,000 maximum penalty, and he rightly says that that represents one deal. For some deals done in south-east England, that may be less than is appropriate. The reason why my hon. Friend the Member for Richmond Park (Susan Kramer) and I put forward the figure of £10,000 is that we feel that such a sum would be a genuine sanction for a serial offender.

Stephen Pound: One thing emblazoned on all our minds is the parliamentary answer given by my rt. hon. Friend the Minister on 23 April to written question 131784 from the hon. Member for Richmond Park. The Minister stated:
“In 2006, the Office of Fair Trading (OFT) received 210 complaints about the conduct of estate agents.”—[Official Report, 23 April 2007; Vol. 459, c. 946W.]
He went on to say that 117 investigations were carried out, which led to three warning orders and five prohibition orders. Does the hon. Lady agree that what she is proposing may act as a deterrent as well as a sanction?

Lorely Burt: The hon. Member for Ealing, North makes another valuable point, and I agree. What surprises and interests me about the figures is how few complaints there are, given the prevalence of what certain hon. Members in this room and the general public would consider to be the misleading, inappropriate and downright illegal activities of some estate agents. I thank him for that.
 The Minister said that this is a quick and simple sanction if an estate agent is not a member of a redress scheme. I totally endorse those words. However, I draw his attention to the wording of the Bill, which says that it is “not exceeding”, so there is no suggestion that £10,000 would be the standard fine; it is the maximum amount that could be levied. It gives flexibility so that, if a small estate agency has not got around to doing the job, you could levy a small fine; if you are dealing with a large estate agency in the south-east of England that is a serial offender, then you have the option to levy a higher fine.

Ian McCartney: Can the hon. Lady explain to me, as a consumer, why, if estate agency A treats me badly and is subject to the law—but unfortunately for me, this estate agency, unlike estate agency B, is a small business, even though it has been crooked and has done me in—because it is a small business, it would not suffer the detriment that business B would have suffered?
This is where you enter the complicated world of determining conduct on the basis of size when it should be determined according to compliance with the requirements of the redress scheme. You join the redress scheme not on the basis of whether you are a large or a small company; you join the redress scheme for the simple reason that, if something goes wrong, the consumer is protected. The level of protection should not be reduced if you use a small company. This would put good small companies out of business. Consumers would go to a large company in case something went wrong. This would cause a real block in the marketplace. Because a company is small, it does not follow that it is a bad company. However, when they do not comply, it is not the size that matters, it is the type of non-compliance. The rights of the consumer should not depend on the size of the company.

Lorely Burt: The Minister makes an important point that it is not size that matters in this situation. In some circumstances, I certainly could not agree with him more. Throughout our discussion today, he has talked about the need for flexibility. I would certainly endorse that. In this circumstance, the need for flexibility is nowhere greater than where there is a range of different organisations; there are very large ones and very small ones. Therefore, let the punishment fit the crime and allow the person who is imposing this fine to have that flexibility. With that, Mr. Weir, my colleague and I wish to press this to a vote.

Mark Prisk: I shall do my best to make no remarks about height, size, or anything else as long as this debate continues.

Tobias Ellwood: Go on, big boy.

Mark Prisk: Thank you very much. It is always nice to have the support of my hon. Friend. I say that in order to ensure that his comment appears on the record.
 I moved amendments Nos. 27 and 28. I would liketo go back in order to address the arguments ofthe Minister. Amendment No. 27 relates to redress schemes. The principle is the same as that of the Liberal Democrat amendments. That is, while I fully  recognise that the £1,000 fine is a fixed figure and can be levied on a number of occasions and is therefore effective in that context, I do not think that it addresses the central point that, in the context of the deals that an agent does each day—the average is £3,000—£1,000 is a small figure to many of them. This is in the context of redress schemes. If, in a morning, an agency practice does six deals, that is £18,000. If there is a £1,000 fine, some agents—the rogues about whom we are concerned—will take a risk assessment in their own minds as to whether it is worth breaching the rule. I do not approve of that—I totally disapprove of it—but they will make that calculation. I therefore do not believe that £1,000 is enough for redress schemes. I am anxious that £10,000 is too much, but we want to get on to the issue of rogue agents with banning orders.

Lorely Burt: The hon. Gentleman has just said that in a single morning an estate agent may well make £18,000, so if the maximum—again I emphasise that word—is only £3,000, does the hon. Gentleman not feel that that will still not be sufficient to concentrate the mind of a rogue estate agent?

Mark Prisk: We are dealing with redress schemes, and although I feel that £1,000 is probably too small, to leap to £10,000 for breaching a redress scheme notice seems disproportionate. As the Minister has made clear, it is a fixed point rather than a maximum. It would be a maximum under amendment No. 28.

Ian McCartney: The trading standards officers levy a penalty charge for every case dealt with, and the redress scheme is intended to be complied with across all customer bases. If there were six, 20 or 30 cases a levy could be imposed in respect of each of them, so it would be £1,000 multiplied by x number of cases. It would be a very expensive process for somebody who did not comply. The whole point is to ensure that they comply. Why? Because if something goes wrong, the redress scheme protects the consumer in all circumstances. That is why we want agents to comply, and the scheme provides a really good incentive. The hon. Member for Hertford and Stortford’s proposal would create the possibility of a charge of £3,000 multiplied by 30, and under the hon. Member for Solihull’s proposal it could be £10,000 multiplied by 30.

Mark Prisk: That is an interesting intervention and mirrors one that was made in the House of Lords when the Government were defending a level of £500 before accepting a change to £1,000. I do not believe that that will be any more effective, because in most instances there will be one or two cases. There could be extraordinarily exceptional circumstances in which30 cases happen in a morning, but I think it unlikely.

Ian McCartney: The point that I am making is not insubstantial. The redress scheme will cover all the client base, so if an agent is not in it, his client base will not be covered.

Mark Prisk: I remain of the view that the £1,000 fine will not achieve the function that we want, of making it crystal clear that there is a sharp financial deterrent. The figure of £1,000 will be in the rogues’ minds; the fact that there are multiple opportunities will not. I feel that £1,000 is inadequate, and I shall press to a Division amendment No. 27 on raising that figure to £3,000.
Amendment No. 28 relates to banning orders. Again, deterrence is at the heart of the issue. The Minister rightly said that at the very end of the process there is the opportunity to go to the High Court, but the frequency with which that happens is pretty limited. I come back to the argument about deterrence. The director general of the Office of Fair Trading has the substantial power to stop one trading as an agent. That is an important power and one that we support.
We are considering here not the redress scheme but someone who has got to the point of having a banning order. As I mentioned earlier, I am concerned here about the kind of person who then pops up in other vocations—I can put it no more kindly than that—and is quite prepared to twist the rules. I am keen to deter such people from coming into the market in the first place. While the ability to remove them from an industry once they have broken the rules is important, it would be just as important and possibly more of a deterrent if we could say to them, “If you come into this industry and bend the rules and break the practices, not only will we bar you from this industry, we will fine you £10,000.” That would be an important message to send, and it is why I shall also press amendment No. 28 to a Division.

Question put:—That the amendment be made.

The Committee divided: Ayes 2, Noes 13.

Question accordingly negatived.

Amendment proposed: No. 27, in schedule 6, page 68, line 25, leave out ‘£1,000’ and insert ‘£3,000’.—[Mr. Prisk.]

The Committee divided: Ayes 6, Noes 9.

Question accordingly negatived.

Amendment proposed: No. 28, in schedule 6, page 70, line 31, at end add—
‘5 In section 3(8) (orders by Director General of Fair Trading) for “the statutory maximum” substitute “£10,000”.’. —[Mr. Prisk.]

The Committee divided: Ayes 4, Noes 9.

Question accordingly negatived.

Schedule 6 agreed to.

Clauses 54 to 57 ordered to stand part of the Bill.

Clause 58 ordered to stand part of the Bill.

Clause 59

Contracts concluded away from business premises

Mark Prisk: I beg to move amendment No. 69, in clause 59, page 37, line 31, at end insert—
‘( ) Regulations in this section may make provision for the exemption of certain service providers.’.
I hope that I have not distressed the Minister too much by not moving amendment No. 68, and I trust that he will be able to use his arguments on a later date—although, I hope, not on this clause.
The purpose of probing amendment No. 69, which relates confusingly to clause 59, is to establish from the Minister the likely provisions of subsequent statutory instruments and therefore the Government’s intentions. My understanding is that their intention is to prepare a single set of regulations for unsolicited and solicited visits. Will the Minister confirm whether that is the case and say whether current conditions for unsolicited visits will be changed in the new regulations? Will he also explain which home trades are likely to be included? He will understand the sensitivity of that point.
I think that it is fair to say that much of the problem centres on the installation of things such as home improvements or property services—double glazing, stair lifts and so on. Clearly, a typical visit by a plumber or electrician is not what we are trying to deal with. Indeed, the clause could create quite significant problems for more regular visits. Will the Minister explain how the regulations are intended to work and how the balance between the rights of consumers and those of tradesmen will be struck? I am sure that, if we reach the stand part debate, more detailed points will be made, but I should be grateful if he could respond to my amendment, which, as I said, is a probing one.

Ian McCartney: I shall try and be as detailed as I can, because, as hon. Members have said, this is a sensitive issue. It is important that we strike the right balance. Let us be clear: the clause is a very important step forward for consumer rights, and it deals with something that has been a cause for concern over many years for trading standards officers, in particular, and for consumer councils and other bodies that represent consumer interests.
The clause relates to contracts concluded with consumers in their home or workplaces—namely, doorstep selling. It gives the Secretary of State the power to provide for exemptions when he makes regulations giving consumers the right to cancel a contract entered into during a solicited visit to a their home or workplace. There is no need for the clause to be amended to enable exemptions to be made in doorstep selling regulations, because clause 60(3) will do that already by providing that regulations under the Bill may apply generally, or be subject to exceptions, and may make different provisions for different cases.
We will consult on the draft doorstep selling regulations, including on potential exemptions, later this year, and I shall write to hon. Members with more detail at the appropriate time. It would not be appropriate, therefore, for the Bill to include specific exemptions, such as for certain service providers, as that would pre-empt the consultation.
The existing doorstep selling regulations already either exempt or make provision for effective cancellations in some cases, such as for food and drink supplied by regular arrangement—for example, milk delivered to a consumer’s door, perishable goods, goods to meet an emergency or those incorporated into land before cancellation, such as double-glazed windows, where the consumer is obliged to pay for the goods and services in connection with their supply. Although I cannot say specifically what exemptions or cancellation provisions might apply, we are aware that some exemptions from the new regulations will be needed.
We are considering the need for an exemption for some specific service providers, such as providers of funeral services. In response to a public consultation on doorstep selling in 2004, we received representations from the funeral services industry, seeking exemption from the new doorstep selling regulations. Many consumers agree in their homes a contract for a funeral or the details of an advertisement announcing a family member’s demise. The provision of funeral services where the contract is made in the home would be caught by the new regulations unless specifically exempted. We are currently considering the industry’s request for an exemption, in the interests of not raising unnecessary obstacles for newly bereaved consumers who are arranging contracts for funeral services in their home at a very difficult time. Undertakers often carry out the funeral within seven days. It is too late for the consumer to change their mind when their loved one is buried, so we are not considering a cooling-off period in those circumstances.
We are aware of the need to make provision for consumers to receive goods and services during the cooling-off period if they wish to do so. We will also aim to ensure that those who require goods or services in an emergency can get them. Limiting the number of specific exemptions from the regulations is a sensible  approach, which will give consumers maximum protection and ensure that they receive necessary services during the cooling-off period.
By contrast, the Opposition’s probing amendment seeks to exempt traders, such as plumbers, from requirements to provide a cooling-off period or to give written notice of cancellation rights, which would weaken the protection considerably. An exemption for emergency services, for example, would mean an exemption for only those services that a consumer wanted to receive during the cooling-off period, not for all the services that were provided by the trader.
I shall give an example. If, under our proposals, a consumer had a burst pipe, they could call a plumber and agree that the work should be carried out during the next seven days. The trader would not refuse to provide the service within the cooling-off period, as the consumer could not subsequently cancel the contract. If the consumer wanted a new bathroom fitted, however, they could agree with the plumber a contract for the plumbing work in advance, so there would be a cooling-off period. The consumer would also receive written notice of their cancellation rights.
There is another example that applies to gardeners. If a tree in a consumer’s front garden fell, perhaps due to strong winds, and was blocking the driveway, the consumer would probably want to have it removed within seven days. However, for routine, regular gardening work done by a gardener who came monthly, the consumer could agree a contract with more than a week’s notice. From the point of view of consumer protection, it would be preferable to ensure that it would be possible for the emergency work to be undertaken, but not to provide a blanket exemption for all gardeners.
The amendment could lead to the exemption of many traders from the new requirements for solicited doorstep sales, thereby giving consumers less protection from rogue traders. That cannot be in the interests of consumers, although I accept that it is a probing amendment. The purpose behind the new regulation is to give consumers good protection from rogue doorstep traders. We will not weaken the new regulations by making lots of holes in them through blanket exemptions for specific traders. We will limit the exemptions to those that are in the interests of the consumer and that give them the best possible protection from rogue doorstep selling.
I remind right hon. and hon. Members that I have used only examples of possible exemptions from the new regulations by way of illustration. As I said, we will consult on the regulations and their exemptions later this year; I do not want to be seen to pre-empt that consultation by saying that those examples are definitely carved out from the regulations. I hope that I have given some sense of what we want and need to do, and that the hon. Gentleman is able to withdraw his amendment.

Mark Prisk: The Minister has tried to put on the record some indications of the scope and character of the regulations. We will have an opportunity to consider them when they come forward. There are one or two issues that I may wish to raise during the clause stand part debate, but I shall not detain the Committee any further. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mark Prisk: The principle behind the clause, as we said on Second Reading, is one that we strongly support, although we will want to see the regulations and how they work in practice. I would not wish to constrain any debate in advance. The regulations for unsolicited business date back to 1987, and provide a seven-day cooling-off period, as the Minister has touched on, for goods or services worth more than £35. Sadly, the rogue element in the doorstep sales industry has increasingly been finding ways around those rules.
We should recognise the size of that business. The hon. Member for Richmond Park referred in an earlier debate a couple of days ago to the fact that there is something over £1 billion in that field. However, if we take doorstep sales of double glazing, for example, sales were £1.6 billion in 2004. Even just conservatories were worth £200 million—I nearly misread that as “Conservatives”, which would be a bargain. Even the market for mobility products, such as stair lifts or scooters, was worth £80 million. That was in 2004, and those markets have grown substantially.
If one thinks about products such as stair lifts or scooters, it is the elderly who get caught out, as I have found out in my constituency. An elderly lady there contacted me because she had seen an advertisement for a raised bed. She is reasonably immobile. She sent for what she thought was a brochure. Five weeks’ later, she got a visit and was persuaded that she had requested the sales visit in seeking the brochure. To be fair, she could not quite remember exactly what she had ticked. She did not have a copy of the coupon that she sent off, because, obviously, she had sent it, so she could not be sure, and she was persuaded that the individual could come in. The result was a potential sale of a £3,000 product. She felt obliged, but her family stepped in, thankfully, and I was also able to ensure that she did not have to proceed. That was not her intention.
My example highlights the differential treatmentof solicited and unsolicited goods, which creates a potential loophole for the unscrupulous. We must correct that danger. Placing doorstep sales on the same contractual footing should close that loophole, as I hope that the Minister will confirm. My only question is whether the Government have made an assessment of the impact of similar measures on doorstep sales elsewhere. Is there any evidence that they significantly reduce the availability of doorstep sales? I would not buy from a doorstep salesperson; but to be fair, I am more mobile and perhaps more awkward as a consumer—not least being a man—so it is something that I would not do. However, for other people, doorstep sales are an important part of how they live and their availability to certain products. I should be interested to know from the Minister what impact the clause might have on those businesses, the vast majority of which are entirely legitimate.

Ian McCartney: I apologise for not answering a question earlier about two sets of regulations covering both aspects. We intend to have a single set of new regulations. We do not intend to amend the current set of regulations, but we think it better to draft a new set that covers all issues included in the consumer’s home. That is important to the point that the hon. Gentleman has just made about loopholes or potential loopholes, intended or otherwise. I hope that that puts his mind to rest in that respect.
On the sale of double glazing, for example, two issues arise: the sale of double glazing and, increasingly, financial agreements. Those arrangements are important, because people will find others not only selling the product but providing the finance and the wherewithal for the product to be provided. It is currently a criminal offence to canvass cash loans to a consumer on an unsolicited basis. The consumer must have expressly requested that in writing. If a credit agreement is signed in the consumer’s home as a result of face-to-face discussion, the consumer has a period in which he or she can cancel, which is usually five days after giving the required notice of cancellation rights.
If agreed in its present form, the proposed consumer credit directive would extend those rights, and it does not make sense to change the present version until the outcome of the negotiations on the directive is clear. The directive may or may not come before a Committee or the European Scrutiny Committee. If it does, we will have a discussion and a debate; if it does not, I will ensure that I write to hon. Members to inform them about the outcome of discussions under the German presidency. We may seek a political agreement in May of this year, but I cannot confirm that that will definitely happen.
We are currently considering credit agreements that are linked to doorstep sales. Those agreements will be within the scope of the new regulations. We are likely to seek views on that issue during the consultation on draft regulations. It is therefore important that we cover not just aspects of the sale of the product itself, but any credit that is given for the purchasing of product. I hope that also puts the hon. Gentleman’s mind at rest. Cancellation of a visit as requested aims to cover that sort of situation in the new regulations. Again, because the regulations have been consultedon, I will ensure that consultation is held with the organisations concerned and interested parties and that access to the consultation is given to hon. Members, who may wish to make a contribution.
Assessing the impact on those businesses that engage on the doorstep is indeed difficult. There is no reliable data available on how many companies engage in doorstep selling. However, measures have been welcomed by leading trade bodies in the industry that already provide cooling-off periods for solicitous sales visits. Those measures are a welcome part of the Bill and, as the hon. Gentleman said, we must attempt to draft regulations that protect the consumer, but that do not prevent an organisation from legitimately carrying out its business and that may actually help many people. Like the hon. Gentleman, I do not use doorstep salespeople, but I cannot guarantee that someone else in my family does not. In fact, I am sure that they do, whether it is Avon women or whatever. People who are housebound require and obtain legitimate services in such a way and we must ensure that legitimate services are protected. I give an assurance that in respect of single unit regulations there will be appropriate consultation. I am happy to offer to have a discussion about that with the hon. Gentleman and the Liberal Democrats in advance of the consultation or while preparing for the consultation.

Ben Wallace: May I just make a plea on the record that we look at rural areas, the coalman and the milkman in that consultation? Those goods are often distributed by solicited and unsolicited means locally and in small areas. In a purely legitimate manner, that is how those businesses have operated over many years.

Ian McCartney: The current regulations do not cover: the selling of food and drink; some of the goods supplied by regular arrangements, such as the daily milk and newspaper deliveries; agreements for £35 and under; agreements relating to land or the construction and extension of property; and insurance and investment agreements. Catalogue goods ordered through an agent are generally not covered provided that the trader allows the customer to return the goods within seven days. Obviously, in the consultation, we will look at all aspects of doorstep selling and I take on board what the hon. Gentleman has said.

Question put and agreed to.

Clause 59 ordered to stand part of the Bill.

Clauses 60 to 66 ordered to stand part of the Bill.

Clause 67

Short Title

Amendment made: No. 67, in clause 67, page 41,line 18, leave out subsection (2).—[Mr. McCartney.]

Clause 67, as amended, ordered to stand part of the Bill.

Schedules 7 and 8 agreed to.

New clause 1

Lettings

Brought up, and read the First time.

Mark Prisk: I beg to move, That the clause be read a Second time.

Michael Weir: With this, it will be convenient to take new clause 3—
‘After subsection 1(1) of the Estate Agents Act 1979 (c. 38) insert—
(1A) In this Act the expression “estate agency work” also refers to persons—
(a) developing and selling; and
(b) directly selling
residential property to members of the public.”.’.

Mark Prisk: New clause 1 seeks to bring the business of lettings agencies within the Bill and to regulate an industry that now handles over £12 billion of people’s money annually and yet, ironically, it is an industry that is without the redress that we have all discussed in a number of debates about the Bill.
That anomaly is not understood by the public, especially when residential sales and lettings are often handled by the same agency—by the same people in the same office. Without including residential lettings in the regulations set out by the Estate Agents Act 1979 and therefore in the Bill, we would, in seeking to promote the arguments for redress schemes and all the other changes that we have discussed, only be doing half the job.
The Conservatives are not the first people to seek this updating of the law. Tenants’ groups, for example, want to see this change and so do a majority of the principal property organisations, including the Royal Institution of Chartered Surveyors; the National Association of Estate Agents; the British Property Federation, and the Residential Landlords Association. All these organisations wish to see the law updated.
At present, lettings agents can get qualified, but it is not obligatory. The British Property Federation tells me that an average agent might handle in the region of 150 to 200 properties worth about £30 million in rent, and yet there are no regulatory rules or codes of practice that he or she is required to follow and no obligation to handle complaints appropriately or to be part of a redress scheme, all of which we have applauded and agreed on in the Committee.
Of course, many tenants get caught out. I know from my own citizens advice bureau how some agents in this market behave. Indeed, the National Association of Citizens Advice Bureaux tells me that roughly 4,500 negative inquiries were made against lettings agents in any typical year in the last few years. Very often, such concerns are raised by some of the most vulnerable members of society. Indeed, the National Association of Estate Agents, which is a reputable organisation, says that the majority of complaints that it receives about its members concern the lettings sector.
I am sure that Ministers will say to us—we heardthe beginnings of their argument earlier—that the Government are putting in place, for example, the tenancy deposit protection scheme, and that is being put into practice. That scheme is welcome, but it only applies to deposits and it provides no mediation for the many other kinds of disputes that arise, which we have discussed in other debates. Therefore I believe that we need to go further.
New clause 1 would amend section 1 of the Estate Agents Act 1979 to extend the definition of estate agency work to include residential lettings and management. Some of the scams that are perpetrated in this market include, for example, charging both landlords and tenants for the same service; charging for simple procedures that are already covered by a landlord’s management fee, and charging exorbitant fees for basic functions. There are a string of examples; perhaps the best known are outlined on theGuardian Unlimited website. For example, someone was once charged £60 simply for the process of administering VAT; £150 for a cleaning fee; £150 for a credit check, and £100 for an administration fee. I think that the hon. Member for Richmond Park referred to some of these examples before. All of those charges were made without good reason.
It is true to say—I think that the Minister alluded to this before—that the national approved letting scheme sets a minimum service standard and seeks to ensure financial probity in this market. However, there is no obligation on companies to join. Equally, although professional bodies exist and maintain good standards, 60 per cent. of letting agents are neither in NALS nor a member of those professional bodies. That is one of the principal reasons why the industry continues to attract the unscrupulous, and the industry recognises that.
The new clause would bring residential lettings within the established legal framework. It would ensure that residential sales and lettings were regulated in exactly the same way; it would give trading standards officers and the Office of Fair Trading the powers that have, as we all recognise, helped to tackle the issue of rogue estate agents in respect of sales; and it would mean that the improvements included in the Bill would apply to the whole of the residential market rather than just half of it.
As a Conservative, I am instinctively cautious about arguing for more regulation. However, as a chartered surveyor and a constituency Member of Parliament, I know that we need to put lettings on the same regulatory footing as sales. The fact that the National Association of Estate Agents, the Royal Institution of Chartered Surveyors and the rest of the industry agree shows that the measure is long overdue.
On lettings, let me put the argument in the words of Shelter, which says clearly:
“Shelter sees first hand the negative consequences of high letting agent fees on people who are already struggling to pay private rented sector rents. This bill provides an opportunity to improve regulation of this sector and ensure consistency and affordability of letting agent practice.”
That is the important issue that I wish to address through new clause 1, which deals with bringing residential lettings in line with all the things that we have said that we believe are good for sales. Through new clause 3, we seek to extend what we mean by estate agency work.
The Act is 28 years old. I mean the 1979 Act, not the Bill that we are discussing, although I appreciate that, having sat for three days, some Committee members might feel that it is indeed 28 years old. I suspect that I might have contributed to that sense of slow passage of time—

Jim Fitzpatrick: No, surely not.

Mark Prisk: The Under-Secretary is very kind. However, the Estate Agents Act 1979 which, I have to confess, I studied at university, it was that long ago, has not allowed us to move forward with the changes in the market over the past 15 or 20 years. There have been significant deregulation and expansion in the mortgage field and the growth in buy-to-lets and in direct sales by house builders and developers—just across the road there is a significant development, all of which was sold not through the estate agency market but directly to home buyers. None of those things will be covered under anything that we have discussed today, because they do not count as estate agency work under the current definition of estate agency.
Thanks to that definition any individual who purchases from that block, or similar blocks that hon. Members know of in their constituencies, will not be covered, so it needs to be changed. We need to take the opportunity to modernise the legislation and to make it relevant to the market as it is today. After all, the long title of the Bill says that it is
“to amend the Estate Agents Act 1979”.
I made it clear to Ministers on Second Reading and prior to this debate that I would like to work with all members of the Committee, and with the Government, to update the legislation and thereby to help all home occupiers. The Government have made positive noises on the issue, and those are very welcome. My aim is to ensure that we end up with the best possible legal framework for the market.
New clause 3 tackles two specific and important changes in the way in which people buy and sell their homes, namely direct sales by house builders and developers and the growing online market. The 1979 Act defines estate agency through the principle that an estate agent is an intermediary. That remains true in most transactions for most people. However, direct sales by house builders and developers have become extremely important in the new homes market, of which a substantial part is first-time buyers. It is especially important for them, as consumers, to be protected, as they would be if they were undertaking conventional transactions.
The same can be said of the increasing number of online property exchanges. I tried to work out how many there were, and I managed to count to over100 different web-based services. Although I appreciate that many of them are merely portals, or shop windows, that do not seek to effect a transaction, an increasing number do seek to effect transactions between persons.
The Minister told us that the aim of the Bill is to ensure that home buyers and vendors have redress, but because the Acts that it seeks to enhance have been overtaken by market developments, the 1979 Act needs to be changed if our discussions on redress are to have any real meaning for members of the home-buying community, especially for first-time buyers.
I do not pretend that the wording of new clause 3 is perfect. It would add a new clause that deals with non-intermediary transactions to the 1979 Act. Section 1A relates to the many cases of homes being developed by house builders and sold direct, without an agent being involved. I am told that in the south-east that is now the norm for most new developments, and unless we include them, much of the property market will continue to be exactly as it is now, and nothing will change for many people when the Bill is enacted.
Section 1A(b) of the new clause refers specifically to internet sales, as at present it is unclear that the Act applies to them. I fully recognise that there difficulties in that part of the new clause, but it is important that it is considered, and the Minister will want to allude to it. 
On Second Reading, the Minister said that it was important that the residential market should be better regulated, and I entirely agree with him. Ensuring proper redress is vital to all home buyers and tenants and the new clause would help in that respect by ensuring that consumers can seek redress for all residential transactions, not just those based on a 28-year-old definition.
In respect of new clause 3, I hope that the Minister can offer us a little more than the promised review of the housing market as a whole, although that review is welcome as it has merits. My worry is that it has taken 28 years to get to the point of modernising the legislation and that it may take three, four or five more years before any reforms take effect. Depending on what the Minister says, I may therefore want to press the new clauses to a Division.

Susan Kramer: I shall make a couple of quick comments. Liberal Democrat Members addressed direct sales and lettings in earlier amendments that tackled those issues in appropriate ways. We are glad that our Conservative colleagues supported them in spirit, but they would not support them in the context of the language of the amendments. But we are not proud: our goal is to get proper protection for people purchasing off-plan and those who rent as tenants. We shall therefore support the new clause in a Division.

Ben Wallace: Many hon. Members have in their constituencies a growing number of residential park homes, often on sites run by excellent owners, but in a few cases by highly dubious and unscrupulous owners. They safeguard their estate agency role in the residential home sector or their letting role in the holiday home sector to an extent that exploits sometimes vulnerable people and raises grave concerns.
I have the distinction of having 5,000 such sites in my constituency, more than in any other hon. Member’s constituency. Constituents of the Minister, the right hon. Member for Makerfield, are involved in a legal case against an unscrupulous owner in my constituency. The 1979 Act deals predominantly with those trading in land, and my constituents and many others are exploited because the land is often owned by the park owner but my constituents own the residential park home, which they have purchased as some form of property. Between now and Report, could the Minister see whether it would be possible simply to extend the definition of “estate agency work” to include the growing numbers of residential park homes so that my constituents are given that protection?
There is a park in my constituency near the village of Pilling where the owner not only insists that the park homes are bought and sold exclusively through him, but on a 15 per cent. commission on the advertised price, not the sale price. He therefore advertises a home for £70,000, sells it for £20,000 and still charges 15 per cent. of the £70,000, a price that he picked out of thin air. I will not abuse privilege by naming this individual, but he abuses the position of being the estate agent.
My hon. Friend’s new clauses would help to clarify the situation and I hope that the Bill is used to clamp down on such people and bring park homes within the fold of other properties that people use as retirement homes or, with the cost of housing as it is, as their main residence because they cannot afford to buy in the areas where they would like to live. I ask the Minister to see whether an amendment to the Estate Agents Act 1979 could give my constituents the protection they deserve and stop these scurrilously criminal people who exploit the most vulnerable people they can find.

Ian McCartney: I predicted this morning that things could get sparky this afternoon and I thought that I would be proved wrong until the last few moments when the hon. Member for Hertford and Stortford said two things. First, he said that the Bill was 28 years out of date and that the Government should do something about the “wasted”—I quote myself—years. Apparently the Conservatives are now the self-appointed representatives who are looking after the interests of people in rented housing. Twenty years ago on 11 June, I became a Member of this House. Almost immediately, I was involved in hand-to-hand combat on the Housing Bill, which took away the rights of all private tenants in England and Wales to have security of tenure in order to stimulate the private housing market. Hundreds of thousands of people who had absolute protection, including the elderly and people with a disability, were put at risk of a recurring tenancy agreement, not for a 12-month period but on a six-monthly basis, with no appeal if the tenancy was withdrawn. There was no redress scheme. There was also no redress scheme when it came to the mis-selling of endowment policies.

Michael Weir: Order. I think that endowment policies are a little wide of the Bill.

Ian McCartney: I am not going to argue about that. My point is that the Bill is about redress. We are trying to determine who speaks up for people in the housing market. I cannot let those remarks go by, given allthat we have been doing as a Government in this regard——and getting no support for it. Again, on redress, it took this Government to get redress for the mis-sold endowment policies. As a consequence, nearly £900 million has been returned to the people who purchased them, who number nearly 430,000. I take no lessons from the hon. Gentleman if we are to have a competition to see who represents the best interests of house buyers.
The debate rests on new clauses 1 and 3, andcovers almost exactly the same ground dealt with by amendments Nos. 24 and 25. The hon. Gentleman’s interest has come a bit late. The hon. Member for Richmond Park said something very interesting, which I can confirm: in the Grand Committee, and on Report and Third Reading of the Bill during its passage through the Lords, the Earl of Caithness tabled amendments to extend the Estate Agents Act 1979 to include lettings in property management—we rightly had that discussion on amendments Nos. 24 and 24. At no stage did the Conservatives support Earl of Caithness’s amendments. When he put them to the vote on Third Reading, they abstained. In the last debate, the hon. Gentleman was competing to see who was the toughest of them all, but it is now about who represents consumers’ interests. A cynical manoeuvre.

Mark Prisk: Will the Minister remind me of which political party the Earl of Caithness is a member?

Ian McCartney: I suspect that he might well be a Tory grandee, but despite that, the Tories did not support him on the issue of principle. When it came to the vote, they did not support him.
I shall explain again: the Government have taken actions to deal with problems in the letting and property development sector. I do not want to go through all of them because we had a really good debate on amendments Nos. 24 and 25 in which I thought that I showed not just empathy with what was being said, but a desire to do something about it. We decided, therefore, to set up the tenancy deposit scheme, which is very important. It is one of the most difficult areas when dealing with protections and disputes.
Under the Housing Act 2004, we did something about houses in multiple occupation. On the Barker report, I mentioned today, for the first time, that the OFT might consider a market study. However, if it does not look at the issues and come forward with proposals, we will look at doing so ourselves. I have prompted a review—not just a simple little review, but a review of redress and regulation in the wider property market. No Government have ever done that. The hon. Gentleman’s party had nearly two decades in which to do it, but did not. The only review that did take place took away consumer rights in the housing market.
It is important that we start the review in the summer. We should not just pick out what are thought to be the six consumer issues of the day. We must be consistent and look at the market as a whole. The issues are different and will produce different responses and answers. That is why it is so important that the review takes place and that we come forward with proposals.
The Estate Agents Act 1979 does not cover lettings and new builds, so we cannot simply introduce secondary legislation for letting agents and property developers. That does not work in practice. However, I accept that the hon. Members for Hertford and Stortford and for Richmond Park have been consistent in respect of what we are trying to achieve. That is why we put forward in good faith our proposals for the review. I hope that that is accepted.
I know that the matter will probably be pressed legitimately to a vote; it is going to be the big issue. However, I must make it absolutely clear that the Government will look at the wider issues in consultation with the industry and consumers. This is the first Government to provide such redress schemes. No Government have ever gone so far with redress in the housing market. None even came close to doing so. I shall, therefore, resist the amendments.
The hon. Member for Lancaster and Wyre and I had a short discussion outside the Committee on that subject and I asked him to write to me about his concerns. I said that we would look at them in the review that is taking place. However, on his specific issues, it might well be that, as I said earlier, if somebody is operating as an estate agent under the terms of the 1979 Act, they are covered already. If that person looks like, sounds like and is like an estate agent, they are covered by the regulations. It would be useful if the hon. Gentleman could put that in writing to me, so that I can respond.

Ben Wallace: My point was that, in the 1979 Act, the definition of estate agency work related to land, and whether “land” encompasses the definition of a residential park home, as opposed to bricks and mortar or a plot of land.

Ian McCartney: The hon. Gentleman wants me to give a detailed answer on a complex issue, where there might even be a legal case. I am trying genuinely to be helpful, and if he writes to me, I will respond. In any event, there are two ways to approach the issue: looking at the specifics and the general review of what is taking place in the housing market. The question may not fall into the specifics but into the issues around the review of the housing market. Either way, I will try to be as helpful as I possibly can to him and his constituents. Many people are in a similar situation in other places, and I know that some of the cases that he raised involve people in my constituency. However, as of yet, they have not asked me to help them, so good luck to him. I hope that he does a good job—I shall keep an eye on him.
The hon. Member for Hertford and Stortford raised several questions about the internet. In December 2005, the OFT issued guidance on the types of activities carried out by internet property retailers and said that their work was unlikely to fall within the definition of estate agency work as contained in the 1979 Act. However, if internet property retailers undertake activities that fall within the definition, they will be required to be members of a redress scheme. I shall write to Members in more detail about that.
I will review what was said in previous sittings. If I have not responded to any questions, I will write to Members so that they have answers before the Bill goes back to the Floor of the House in two or three weeks’ time. With that, I ask the hon. Gentleman to do something that I am sure he will not do. I ask him to withdraw the amendment on the basis that the Government will go ahead with a review. As a consequence, there will be a more proactive and extensive review of market issues, including those that he raised. I have an empathy with those concerns and want to try to resolve them.

Mark Prisk: The Minister’s mind has failed at the last hurdle. Sadly, just when we thought that we would have a positive debate all the way through, he could not resist the partisan nature of it. If it is the case that changes were not made during the years of the Conservative Government and, indeed, the subsequent 10 years of this Government, that is something on which we should both reflect. I do not seek to make a partisan point about it.
It is a shame that the Minister chose to be negative on the important issue of tenancy rights. It may be that he is embarrassed that many Labour Back Benchers actually support the principles that we are propounding. It may be that he hoped that we had come to the end of the debate and was therefore unwilling to engage in the matter. I hope not, because that would be a shame.
Apparently there is some sort of competition in the Minister’s mind on the question of tenants’ rights. I am not engaged in that process. I am more interested in what we can do now, not in whether mistakes were  made 10, 15 or 20 years ago. Perhaps my party did do something wrong 10, 15 or 20 years ago. If we did, we would be happy to acknowledge that we did. It is a shame that the Minister lowered the debate in that way.
We have been offered a commitment to a review. I am sure that that will really help the tenants who are struggling in the circumstances that I described. I recognise that there is merit in looking at the housing market as a whole. That would have considerable benefits, but a commitment to a review does not amount to much.
We did not get from the Minister any reference, for example, to the anomaly whereby the person who deals with someone who is buying a home will be treated entirely different when they let someone a home. He did not deal with the question about direct sales by house builders. The first-time buyers who make up the majority of that market will find that, if they buy a new home from a house builder, they are not protected by anything that we have discussed in the Bill. They will not be covered.
I had hoped that we might have a little more positive thought. I had hoped that the Minister might indicate that he would put into the Bill on Report a clause that will give a future Secretary of State, whether of his party or mine, an opportunity to amend the 1979 Act. That would allow a considered review of the market but also the opportunity for the Government to introduce in the next 12 months or so changes that would make a real difference to tenants and estate agents. Instead, we were given a commitment to a review. That is fine. If that is the Government’s position, we will listen to it. We will act in a collaborative way, but the commitment is inadequate.
I return to the two points that Shelter raised, which are that the proposals that we made on tenancy be included and that the definition of estate agency be extended. Both would provide us with consistency and affordability for the people involved. That is the aim. That is what Shelter sought, and—

Tom Clarke: Will the hon. Gentleman give way?

Mark Prisk: No, as I am drawing to a close.
That is where I think we could go. On Report, we will have the opportunity to consider whether positive changes could be made, improving this legislation, and, therefore, it is my wish to press new clause 1 and new clause 3 to a division.

Question put, That the clause be read a Second time:—

The Committee divided: Ayes 6, Noes 8.

Question accordingly negatived.

New Clause 3

Definition of ‘estate agency work’
‘After subsection 1(1) of the Estate Agents Act 1979 (c. 38) insert—
(1A) In this Act the expression “estate agency work” also refers to persons—
(a) developing and selling; and
(b) directly selling
residential property to members of the public.”.’.——[Mr. Prisk.]

Brought up, and read the First time.

Motion made, and Question proposed, That the clause be read a Second time.

The Committee divided: Ayes 6, Noes 8.

Question accordingly negatived.

Ordered,
That certain written evidence already reported to the House be appended to the proceedings of the Committee—[Mr. McCartney.]
Written evidence to be reported to the House
CEAR 1 Which magazine
CEAR 2 BOC Gases
CEAR 3 Citizens Advice
CEAR 4 Law Society of Scotland
CEAR 5 Federation of Small Businesses
CEAR 6 National Association of Estate Agents

Bill, as amended, to be reported.

Ian McCartney: On a point of order, Mr. Weir, I am extremely grateful to you and to Mr. Caton for your guidance and stewardship during these proceedings, as well as for your tolerance and patience during the days of debate. In this relatively short session, we have had broadly constructive debates that I believe reflect a common desire on all sides to deliver a Bill of real benefit to all consumers.
In that spirit, I also thank the hon. Members for Hertford and Stortford and for Richmond Park for their constructive and diligent approach to proposals, and for their contributions. I put on record my appreciation for the way in which they have taken on board Government views on several issues. I have, in turn, reciprocated. I am fully aware that, despite areas of agreement, there remain areas of difference between us, and I wish to return to those on Report.
I am grateful to the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Poplar and Canning Town, for his unstinting support in Committee. He dealt with a large number of important issues, particularly during my enforced absence last Thursday. I put on record my appreciation for my Parliamentary Private Secretary, my hon. Friend the Member for Wigan, and for my hon. Friend the Member for West Ham, for keeping the Government side of the Committee organised. I also thank my hon. Friend the Member for Ealing, North, and I am sorry that I failed to restrain his premature rising on one occasion.
I thank the officials, who have done a brilliant job, not just in Committee but through the months during which we have prepared for the Bill, and kept the Committee fully briefed and informed. Finally, Mr. Weir, I thank the Clerk and all the staff for their efforts: the Hansard reporters, the police and the officers of the House have played an important part in ensuring the smooth running of the Committee.
I thank you for listening to me, Mr. Weir. This is the first time that I have been in Committee for a number of years, and I have really enjoyed it. I look forward to Report and, even more importantly, to when the Bill becomes an Act and we implement it effectively for the first time for millions of consumers and get them redress in situations in which, until now, they have been able to complain but had no possibility of getting redress. I look forward to the discussions that will take place in a few weeks’ time.

Mark Prisk: Further to that point of order, Mr. Weir. I match the Minister’s remarks to you and your fellow Chairman, Mr. Caton. The Committee has been pleasant and we have managed to keep matters reasonably restrained. There has been the odd outburst now and again, but what would we be if we were not able to do that? I thank you for your guidance, Mr. Weir, and extend my thanks to the officers of the House and particularly the Clerks for their help and guidance in ensuring that we have been able to consider matters and prepare amendments to ensure that the quality of scrutiny is as it should be.
I extend to both Ministers my thanks for the generally very positive way in which they have approached the issues. We will disagree on certain issues, which is only right and proper, and I am sure that that will continue in a positive way—or occasionally a negative way—on Report. Generally speaking, the way in which we have sought to deal with the matters before us, and the way in which the Ministers have reciprocated, has been positive. I hope that it has shown the House in a good light. I extend those comments to the hon. Ladies, the hon. Members for Richmond Park and for Solihull, the other double act in this theatre of comedy. Sadly, the jester is not with us—the hon. Member for Ealing, North, or, as I always call him, the hon. Member for Ealing comedy.
Last, and far from least, I thank my hon. Friends, who have steadfastly listened to—I was going to say my remarkable erudition, but they might have different words for it. They have been supportive and helpful, and it is always useful to have people who take an interest. My hon. Friends have not only done that but on a number of occasions forced the Government to recognise the weaknesses of the Bill and perhaps change them.
On that note, Mr. Weir, I shall sit down for the last time in the Committee.

Susan Kramer: Further to that point of order, Mr. Weir. Thank you for the opportunity to speak the last words in the gathering of the Committee. I express my thanks, on behalf of my hon. Friend the Member for Solihull, to you and to Mr. Caton for chairing the Committee and for your patience with people whohave relatively little experience of Committee work. Although many of the amendments that we wish had been accepted were not, there was real movement in the course of the Committee’s deliberations.
The underlying issues and shared concern across the House that the Bill should eventually be a successful Act led to positive exchanges with which I was really pleased. I was a little saddened by the tiny bit of sniping at the end, which perhaps reminded us of the place that we are in. However, the Committee has been overwhelmingly positive and we feel that real progress has been made. We hope that more can be made on Report. My thanks to everyone who has beeninvolved, and I return the compliments to Ministers, Government Members and the Conservative Opposition as well as to yourself, Mr. Weir, andthe officials.

Committee rose at twenty-nine minutes past Six o’clock.